The Obama administration is pushing back against news reports that it is creating an Internet ID for all Americans. (AP)

The Obama administration is pushing back against reports that it is creating an Internet ID for all Americans, saying that it is part of a public-private partnership to develop an online identity for consumers to conduct business safely online.

Commerce Secretary Gary Locke announced last week that the administration is currently drafting what it calls the National Strategy for Trusted Identities in Cyberspace, an effort that will allow people to obtain an online ID for various types of transactions, such as sending e-mails, online banking and accessing electronic health records.

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White House officials insist this will not lead to Big Brother on the Internet, but rather a strong partnership in which the private sector will take the lead.

"Frankly, what we're trying to do is create a marketplace of providers, both public and private, who can do this so there's not one single thing," a senior administration official told FoxNews.com. "But how do we create a system that works? We think the private sector can do a better job than we can. That's what we're exploring. The big thing we're trying not to do is have big government running this. It has to be a shared partnership."

Though first reported as a Commerce Department initiative, Locke, while not offering many details, rejected that notion during an event Friday at the Stanford Institute for Economic Policy Research. He said the national program office will facilitate the private sector as it develops new ID authentication technologies, not take the lead.

"The Internet will not reach its full potential until users and consumers feel more secure and confident than they do today when they go online," Locke said. "A coordinated national strategy to significantly improve online trust will put e-commerce on stronger footing. The National Program office will engage the best minds in the field from both the public and private sectors to give people greater confidence that their personal information is safe when they engage in online transactions."

Jim Dempsey, vice president of the Center for Democracy and Technology, expressed support for the administration's effort at a panel discussion Friday at Stanford University, saying the partnership is crucial to forging trust.

"You know the problem here at some level is that the government needs an identity ecosystem or identity infrastructure," Dempsey said. "It needs it for its own services as well as part of the solution to the broader cybersecurity problem as well as one of the foundations of e-commerce. But the government cannot create that identity infrastructure. Because if it tried to, it wouldn't be trusted. Not only doesn't it have the technological capability, but it doesn't have the trust, and this is about trust."

But some privacy advocates are skeptical of the initiative.

Lee Tien, a senior staff attorney with the Electronic Frontier Foundation, a privacy advocacy group, told FoxNews.com that he believes that the initiative poses a serious threat to privacy and free speech online.

"It's not entirely clear to me what, even now after having followed this program for months, what problems it's really trying to solve and how what it's proposing will solve it," he said, adding that the burden is on the government to show "what's the real benefit here."

Tien said it's pretty clear that the initiative will help law enforcement even though administration officials haven't mentioned it.

"The more you have to authenticate yourself on the Internet, especially when it's really not important, the more information about you that's available to law enforcement or government or anyone else."

The ACLU issued a press release entitled "Don't Put Your Trust in 'Trusted Identities,'" in which the group expresses fear that privacy protections would be violated in the interest of national security.

"In short, it's possible that if all the stars lined up perfectly, this 'online identity ecosystem' could be a good thing," the group wrote. "Unfortunately, there are too many reasons to doubt that all the stars will line up perfectly."

The ACLU said it also wants more details from the administration to determine whether the program will be effective, if the government will or can create the IDs and what a secure electronic ID will cost.

"Unless the Obama administration comes out with a detailed proposal for an identity scheme that does these things in ways that are hard-wired into the system, and can convince us that its protections won't fall by the wayside at any point, this scheme appears to be a sweeping, utopian intervention in the Internet driven by anti-freedom security agendas that promises to do more harm than good," the group said.

While the Commerce Department's role may provide relief to privacy advocates who worried that Homeland Security or intelligence agencies may participate in the program, Locke rejected the notion that the partnership is part of a government effort to issue a national identity for Internet users.

"We are not talking about a national ID card," he said. "We are not talking about a government-controlled system. What we are talking about is enhancing online security and privacy, and reducing and perhaps even eliminating the need to memorize a dozen passwords, through creation and use of more trusted digital identities."

The development of an all-encompassing Internet ID has also raised fears that it will be easier for hackers searching for targets. But administration officials said the opposite will be true.

"The whole point of this whole initiative is to make cyberspace more secure," the senior administration official told FoxNews.com. "We'll look at every angle of this thing to stay one step ahead of the people with nefarious intent."